John Lewis posted a sharp drop in profits today after its "never knowingly undersold" promise meant it had to match heavy discounting by rivals.

The Partnership, which is owned by its 76,500 staff, reported a 55% fall in operating profits at its department stores division to £15.8m, despite a 1% increase in like-for-like sales in the six months to July 30.

The Waitrose supermarket arm reported a strong surge in sales, up 8.7% to £2.6bn, but profits dropped by 13.8% to £110.2 million due to customer offers and investment in future growth, including new stores.

Across the group, first-half profits fell by 18% to £91.2m.

Chairman Charlie Mayfield said trading conditions were set to remain challenging but added that sales were up by 7.4% in the first six weeks of the second half and recent investment has put it in a strong position to "seize the opportunity created by a rapidly changing retail environment".